In normal colon, claudin-7 is one of the highly expressed claudin proteins and its knockdown in mice results in altered epithelial cell homeostasis and neonatal death. Notably, dysregulation of the epithelial homeostasis potentiates oncogenic transformation and growth. However, the role of claudin-7 in the regulation of colon tumorigenesis remains poorly understood. Using a large colorectal cancer (CRC) patient database and mouse models of colon cancer, we found claudin-7 expression to be significantly downregulated in cancer samples. Most notably, forced claudin-7 expression in poorly differentiated and highly metastatic SW620 colon cancer cells induced epithelial characteristics and inhibited their growth in soft agar and tumor growth in vivo. By contrast, knockdown of claudin-7 in HT-29 or DLD-1 cells induced epithelial-to-mesenchymal transition (EMT), colony formation, xenograft-tumor growth in athymic mice and invasion. Importantly, a claudin-7 signature gene profile generated by overlapping the DEGs (differentially expressed genes in a high-throughput transcriptome analysis using claudin-7-manipulated cells) with human claudin-7 signature genes identified high-risk CRC patients. Furthermore, Rab25, a colon cancer suppressor and regulator of the polarized cell trafficking constituted one of the highly upregulated DEGs in claudin-7 overexpressing cells. Notably, silencing of Rab25 expression counteracted the effects of claudin-7 expression and not only increased proliferation and cell invasion but also increased the expression of p-Src and mitogen-activated protein kinase-extracellular signal-regulated kinase 1/2 that were suppressed upon claudin-7 overexpression. Of interest, CRC cell lines, which exhibited decreased claudin-7 expression, also exhibited promoter DNA hypermethylation, a modification associated with transcriptional silencing. Taken together, our data demonstrate a previously undescribed role of claudin-7 as a colon cancer suppressor and suggest that loss of claudin-7 potentiates EMT to promote colon cancer, in a manner dependent on Rab25.